KINGSTON Properties Limited (KPREIT) wants to acquire up to five overseas properties in the Cayman Islands and USA which would more than triple its annual net operating income to US$2.7 million, financials indicate.

The five properties require an investment of US$34.3 million or higher than the J$954 million that it plans to raise in its rights issue. As such KPREIT plans to partially utilise the funds it raises to consider acquiring a portion of these properties.

The five properties at over 57,500 square feet will add to its existing two properties in the USA and one in Jamaica valued at roughly US$8.2 million.

“To this end KPREIT has selected the below list of properties as potential acquisition opportunities for KPREIT and is seeking to raise from this offer J$953.9 million in order to purchase some of these properties,” stated KPREIT in its circular letter relating to its renounceable rights issue of 136 million shares published this week.”We believe that by purchasing a combination of any of the below properties with the proceeds of the Offer, KPREIT will provide its shareholders access to above average net cash yields in United States dollars as well as geographic diversification outside of Jamaica.”

KPREIT added that if it is unable to close on any of the properties it will pursue other real estate acquisitions. The offer opens on July 22 and ends on July 28 with each new ordinary share selling for J$7.00. KPREIT intends, immediately following the closing of the offer, to make an application to the Jamaica Stock Exchange for the listing of the stock units arising from the new ordinary shares. KPREIT initially listed on the JSE in 2008, as the first real estate investment trust on the exchange.

The five potential properties include Park Place, Grand Cayman, a three-storey building at 25,572 sq. ft which includes 12 condos and retail space; 1790 Coral Way, Miami, USA includes three offices at 20,400 sq ft; 6 Madison Ave, Cresskill, New Jersey, USA which includes 28 residential and eight commercial units; the ‘W’ Fort Lauderdale — five units of a 146 unit condo/hotel at 5,650 sq ft; and Midblock 3250 NE 1st Ave Miami — 7 units at 5,850 sq ft.

Executive director Fayval Williams and chairman Garfield Sinclair believe that KPREIT can earn a 6.3 per cent current cash yield from the potential portfolio of five properties. The potential earnings are similar to its current portfolio which earns a 6.5 per cent current cash yield.

KPREIT earned total comprehensive income of J$12.25 million on rental income of J$25.6 million

for its March quarter 2015

or one-third lower comprehensive income than a year earlier. The company explained that the income for the quarter reflected

foreign currency translation differences for foreign operations.

As of the quarter ended March 2015, the Real Estate Investment Trust (REIT) derived approximately 54 per cent of its revenues from Miami, Florida, USA and 46 per cent from Jamaica. All revenues are earned in US dollars and converted to local currency when necessary.

“It is expected that after the rights offer approximately 96 per cent of revenues will be from the USA, a developed economy with diverse primary

and secondary real estate markets across its 50 states,” stated the circular.

The company targeted the downtown Miami real estate markets as it combines key ingredients of “housing, retail, dining, and walk-to-work offices” within regenerated urban cores.

The company added that it had a “good year” in 2014 and made significant progress in the execution of its strategy.

“We found new opportunities in which to invest capital. We executed on sale transactions that demonstrate the long-term value creations achieved,” it added.

KPREIT holds total equity of $863 million on total assets of $1.4 billion up to March 2015.